Buying a home comes with more than just a down payment. Between closing costs, inspections, and moving expenses, the upfront costs can feel overwhelming, especially for first-time buyers. But here’s a powerful strategy many buyers overlook: seller credits.

When used right, seller credits can dramatically reduce your out-of-pocket expenses, giving you more flexibility, more buying power, and less stress at the closing table.

What Are Seller Credits?

Seller credits (also called “seller concessions”) are funds the seller agrees to contribute toward your closing costs as part of the deal. Rather than coming out of your pocket, certain expenses are paid using the seller’s proceeds from the sale. Think of it as a discount, just structured in a way that keeps the sale price intact while lowering your cash-to-close.

What Can Seller Credits Be Used For?

Seller credits can cover many of the upfront costs buyers face, including:

• Loan origination fees
• Title and escrow charges
• Prepaid property taxes and insurance
• Appraisal or inspection fees
• Interest rate buydowns
• HOA transfer fees

Important: Seller credits cannot be used toward your down payment or to exceed actual closing costs.

How Much Can You Ask For?

There are limits on how much credit you can receive, based on the loan type:

Loan Type	Max Seller Credit
Conventional (with <10% down)	3%
Conventional (10–25% down)	6%
FHA	6%
VA	4%
USDA	6%

How to Negotiate Seller Credits

Even in a competitive market, seller credits are on the table, especially if:

• The property has been sitting a while
• The seller is motivated
• You’re offering full price or close to it
• Your agent writes a clean, compelling offer

Pro Tip: Ask for credits in place of a price reduction. For example, instead of asking the seller to lower the price by $10,000, ask them to credit $10,000 toward closing costs. This helps you preserve cash upfront without affecting their bottom line too much.

Using Seller Credits for a Rate Buydown

One of the most strategic ways to use seller credits is for a temporary rate buydown. For example, a 2-1 buydown reduces your interest rate by 2% the first year and 1% the second year—making your monthly payment more affordable as you ease into homeownership.

This can be a win-win:

• You get lower payments for the first two years
• The seller gets to keep their asking price
• Your upfront cash requirements drop significantly

Who Should Consider Seller Credits?

• First-time buyers with limited savings
• Self-employed buyers needing extra reserves
• VA or FHA buyers using low-down-payment loans
• Buyers in higher-rate environments looking for temporary relief
• Anyone who wants to keep more cash in the bank after closing

Seller Credits Are a Smart Tool, If You Know How to Use Them

Buying a home doesn’t have to drain your savings. With the right strategy, you can use seller credits to:

• Cover thousands in closing costs
• Lower your upfront expenses
• Buy down your interest rate
• Make your offer more flexible

Need help structuring your offer with seller credits? That’s exactly what I do. Let’s work together to build a homebuying strategy that saves you money now and long-term.